Expansion of electronic methods of effective service of documents in insolvency proceedings

Bioaction Pty Ltd v Ogborne, in the matter of Bioaction Pty Ltd [2022] FCA 436

In Bioaction Pty Ltd v Ogborne, in the matter of Bioaction Pty Ltd [2022] FCA 436 (Bioaction), Cheeseman J applied the amendments made to the Corporations Act 2001 (Cth) (Act) by Schedule 4 to the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth). These amendments, which commenced on 16 December 2020, have significantly expanded the scope of the electronic communication of documents that are required or permitted to be given under (inter alia) Chapter 5 (External Administration) of the Act.

As part of the amendments, new definitions of “document”, “electronic communication” and “nominated electronic address” were introduced into s 9 of the Act. Sections 105A (“[w]hen is an electronic communication sent and received”) and 105B (“[p]lace where an electronic communication is sent or received”) were also inserted into the Act, and the existing s 600G was repealed and a new section (“[e]lectronic communication of documents”) was substituted.

The issue in Bioaction was whether an application for an order setting aside a statutory demand had been served within the 21 day statutory period specified in s 459G of the Act.

Justice Cheeseman found that there had been effective service, in circumstances where a sealed copy of the application to set aside had been sent by email to the email address of the solicitor who had effected service of the statutory demand. This was despite the fact that the statutory demand had not included any email address for service, and that the solicitor, albeit after receipt of the email, had informed the sender that she did not have instructions to accept service by email.

The sequence of events is that Mr Ogborne’s statutory demand was served on the company on 13 January 2022. The address for service of copies of any application and supporting affidavit was the office of the solicitor who had prepared and served the statutory demand. The last day for service of the application to set aside was 3 February 2022. On 1 February 2022, Bioaction’s solicitor sent an email to Mr Ogborne’s solicitor, inquiring as to the date of service of the statutory demand. There had been previous correspondence by email between them in relation to the disputed debt. Mr Ogborne’s solicitor replied on 3 February 2022, advising the date that the statutory demand had been served. She then turned off her computer and left the office. She did not access her email from any device until she returned to the office the next day.

On 3 February 2022, Bioaction’s solicitor sent Mr Ogborne’s solicitor an email attaching sealed PDF copies of the originating documents as filed with the Court. At the hearing, an expert in information technology gave unchallenged evidence that the email was capable of being received within eleven seconds of being sent.

On 4 February 2022, Mr Ogborne’s solicitor sent an email confirming receipt of the email with the attachments, but advised she did not have instructions to accept service by email.

Justice Cheeseman reviewed the conflicting authorities (all decided before the 2020 amendments) as to whether service by electronic means for the purpose of s 459G was effective where an address for electronic service on the creditor had not been nominated in the statutory demand or otherwise consented to. In general, these cases dealt with the “effective informal service rule” in its various manifestations.

In Bioaction, it became unnecessary to decide the issue by reference to the effective informal service rule because the effect of s 600G (when read with ss 105A and 105B) was that the originating documents had been formally served within the time limit.

Justice Cheeseman noted that s 600G authorises a document to be given to the recipient under Chapter 5 of the Act by means of an electronic communication, and that section 459G is situated within Chapter 5. The giving of the document by electronic communication may be achieved by giving the recipient sufficient information to allow the recipient to access the document electronically: [51].

Her Honour rejected the creditor’s submission that s 600G, which refers to the “giving” of documents, does not apply to s 459G, which requires the documents to be “served”, noting that the Corporations Act does not define the word “serve”. She saw no reason to exclude from the use of the more general word “given” the more particular meaning of the word “served”, when what is comprehended for service in s 459G is the giving or delivery of a document at a designated address: [76]-[78]. Her Honour held that the scope of s 600G had been expanded by the substituted section so as to capture an application made under s 459G: [83].  Another expansive aspect of the amendments in relation to s 600G was to remove the requirement for the consent of the recipient as a condition of electronic communication: [85]. In lieu of this requirement, two conditions were introduced – first, there must be a nominated electronic address in relation to the recipient and secondly, it must be reasonable to expect that the document will be readily accessible so as to be useable for subsequent reference: [85].  However, “nominated electronic address” is defined to include, in the case where the addressee has not nominated an electronic address, an electronic address that the originator believes, on reasonable grounds, to be a current electronic address for the addressee for the receipt of electronic communications: [85].   

On the facts in this case, it was reasonable for Bioaction’s solicitor to believe that the current electronic address of Mr Ogborne’s solicitor was the email address she had used during the exchange of emails between them concerning the disputed debt before the statutory demand had been served: [93]. 

Further, her Honour held that proof of effective service did not require that there be proof that the documents were actually accessed or reviewed or even came to the attention of the addressee. What matters is that they could have been, had the addressee sought to do so: [95].   

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